The Employment Rights of Repeatedly Renewed Private Sector Contract
by Steve van Dresser
Many companies have begun hiring contract workers to do work previously
done by regular "lifelong" employees. For Japanese and foreigners alike,
working under contract can be intimidating. The uncertainty regarding future
employment prospects can be stressful, to say the least. There is a body
of law, however, which protects the employment security of so-called temporary
workers. It may be useful to have some general idea of contract worker
Unlike in the United States and in many other countries, in Japan a
job is a constitutionally protected right. The Japanese constitution (Article
27) states that, "All people have the right and the obligation to work.",
and further (Article 28), "The right of workers to organize and to bargain
and act collectively is guaranteed". The courts have ruled that the right
to work can be taken from a worker under a very limited number of circumstances,
each of which is well defined. These are(1):
Any dismissal outside of the above is considered to be an "abusive dismissal",
an abuse of right, not allowed under the law.
Severe violation of work rules or law.
A union's demand for violating a union shop agreement.
Release of employees from temporary or seasonal jobs.
Reduction in workforce or business necessity
Change of curriculum (a special provision for faculty at academic institutions
II On what basis can a company terminate an employee?
III Other Considerations
Employee performance. The first three reasons listed above, i.e., violation
of work rules, incompetence, or reversal of hiring contrary to a union
shop agreement are the valid reasons for terminating a regular employee,
based on the employee's performance. It is easy to see why a regular employee,
i.e. one whose employment arrangements have no fixed time, is considered
to be employed for a life-time. The other reasons for dismissal relate
to corporate exigencies.
Temporary Workers. Japanese courts have ruled that the temporary nature
of a job is defined principally by the job, not the person filling the
job. Temporary jobs have been defined(2)
"Purely temporary workers who are hired because of very transitory needs."
"Seasonal workers who are hired to meet seasonal business pressures."
"Ordinary temporary workers hired under short-term labor contracts ...
which are extended in the absence of special circumstances, but who, in
the event of a business slowdown are laid off ahead of regular employees
(and much of whose work is not different from that of regular employees)."
For employees under this category who have been repeatedly renewed, " the
doctrine of abusive dismissal applies by analogy to refusals to renew short-term
labor contracts." The courts have ruled that "the repeatedly renewed labor
contract of a temporary factory worker is, 'essentially not different from
a contract without a fixed period,' 'the legal regulation concerning dismissals
should be applied to it by analogy.'" That is, a repeatedly renewed contract
employee of this type is subject to the same protections against abusive
dismissals as a regular employee, i.e., only violation of rules, incompetence,
union agreements, or employment adjustment are valid reasons for dismissal.(3)
"Temporary workers who may be promoted to regular company employees after
their hiring for two or three month periods renewed several times and passing
a promotion examination."
"Temporary workers who are hired after mandatory retirement."
"Temporary workers whose contract renewals are limited (e.g. a six-month
period which can continuously be renewed for a total of, but not more than
Reduction of Workforce. It has been ruled that repeatedly renewed contract
workers are in an inferior position to regular employees in the event of
"Employment adjustment." Under this ruling, all employees under short-term
contract are subject to termination before "regular employees."(4)
However, before any dismissal under an employment adjustment takes place,
the following rules must be followed:(5)
The employer must prove there is a need to reduce the number of employees
The employer must prove that other labor reducing measures, such as early
retirements or transfers, have been tried and failed to reduce work force
The employer must set forth clear and reasonable policies for selecting
specific persons to be dismissed .
The employer must explain to the union or the workers the need for an adjustment
dismissal, its timing, scale, and method in order to obtain their assent,
and must discuss these matters with them in good faith.
More recent rulings have specifically noted a category of contract
worker whose contract term is one year. These workers fall between regular
employees and short term temporary workers. Employers have the obligation
to avoid dismissing these workers who do essentially the same work as regular
Change of Curriculum. As a special consideration for educational institutions,
a change in curriculum can justify terminating some faculty at the same
time as hiring others. Whether this can be used expressly for "getting
rid of undesirable" teachers is being tested presently in the courts.
In addition to the limitations on terminations outlined above, even
more restrictive rules apply when dealing with members of labor unions.
Actions by employers to impede union activities or penalize employees for
union participation are also illegal. "Dismissals of workers because they
are union members, their having engaged in proper union activities, or
similar reasons are invalid as violations of the public policy contained
in the guarantee of organizational and other rights in Article 28 of the
An initial contract offering, a job offer, defines the labor relationship.
Subsequent erosion of benefits and conditions don't necessarily void the
original relationship. What you are first told may have more weight than
what you are subsequently offered.
Japanese court cases take a long time to process. Foreigners who don't
have a right to remain in Japan, may not be able to effectively assert
their employment rights. For those who can fight, often the courts will
issue preliminary rulings which force employers to continue salaries and
benefits until final resolution. Many cases are settled "out of court"
after such preliminary rulings.
Japanese courts don't always reach the same conclusions courts would
reach in other countries. Often, results strain the imagination of what
might seem logical in other circumstances. Sometimes it will seem that
a court has bent the rules beyond all possibility to reach a conclusion
the judge has already decided on. Invisible relationships do exist between
Japanese governmental institutions and corporate institutions and this
applies to courts as much as to parliamentary bodies.
1. Most of the information relating to temporary
workers is from Japanese Labor Law, by Kazuo Sugeno, translated
by Leo Kanowitz, University of Washington Press, 1992
2. Sugeno, 1992, p. 154
3. Sugeno,1992, p. 156 referring to:
Yakigumi, Osaka High Court, January 27, 1960
Aisan Kogyo, Nagoya District Court, February 22, 1963
Toshiba Yanagimachi Kojo, Yokohama District Court, April 24,
Mitsubishi Zosen, Nagasaki District Court, June 12, 1963
Toshiba Yanagimachi Kojo, Supreme Court, First Petty Bench, July
Tokyo High Court September 30, 1970, 606 Judgements 3
4. Sugeno, 1992, p. 156 referring to
Hitachi Medeiko, Supreme Court, First Petty Bench, December 4,
5. a representative case includes
Fuyo Business Service, Nagano District Court, Matsumoto Branch,
March 29, 1996
6. Sanyo Denki Electric Appliances, Osaka
District Court, October 22, 1991
(translated from Kazuo Sugeno Japanese Labor Law of a later date, publication
7. Sugeno, 1992, p. 401 referring to
Trade Union Law, Articles 7 and 27
The article was published in the December issue of "The PALE Journal
of Professional Issues" of the Professionalism, Administration, and Leadership
in Education Special Interest Group of the Japan Association for Language
Teaching (JALT). This page published on January 21, 1999